Correlation Between Simon Property and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Simon Property and Cincinnati Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Simon Property and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Cincinnati Financial, you can compare the effects of market volatilities on Simon Property and Cincinnati Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Simon Property with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Cincinnati Financial.
Diversification Opportunities for Simon Property and Cincinnati Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simon and Cincinnati is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and Simon Property is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Simon Property Group are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of Simon Property i.e., Simon Property and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Simon Property and Cincinnati Financial
Considering the 90-day investment horizon Simon Property is expected to generate 1.65 times less return on investment than Cincinnati Financial. But when comparing it to its historical volatility, Simon Property Group is 1.01 times less risky than Cincinnati Financial. It trades about 0.13 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 11,313 in Cincinnati Financial on September 3, 2024 and sell it today you would earn a total of 4,670 from holding Cincinnati Financial or generate 41.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Cincinnati Financial
Performance |
| Timeline |
| Simon Property Group |
| Cincinnati Financial |
Simon Property and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Cincinnati Financial
The main advantage of trading using opposite Simon Property and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Cincinnati Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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